Obama must first fix a struggling economy

President-elect Barack Obama deserves congratulations — and a warning to be careful what you wish for in this life. To be sure, he made some great speeches along the campaign trail. But now comes the real test. Mr. Obama's plans of action will be measured with much more scrutiny than his words. His place in history will be measured by whether he can actually breathe life back into an ailing economy. Mr. Obama, who inherits a set of challenges not seen since Franklin Delano Roosevelt took office in 1933, has his hands full as he starts outlining the transition and planning how to tackle the nation's many problems once he is sworn in as president Jan. 20. He faces a broken financial system, an ailing infrastructure, a growing environmental crisis, an economically challenged public and two wars. Mr. Obama obviously should be spending most of his time preparing to hit the ground running by quickly selecting his cabinet and holding early cabinet meetings to plan the actions needed to address these problems. The No. 1 problem is the economy. Mr. Obama and his team have said very little during the campaign about exactly how they would address the economic crisis. Now they should choose their priorities and develop plans to fix the underlying problems. They should keep in mind, meanwhile, one of the precepts of being a doctor: "First, do no harm." And they should tell the public as soon as possible what those priorities and plans are, and begin to work with the already heavily Democratic Congress to implement their ideas. Telling the public what they plan is essential because it will help restore waning confidence. Working with the current Congress rather than waiting until the new Congress is sworn in also will boost confidence. The question that must be asked is: What will the new administration do to free up the credit markets that the current administration and Congress have not already done? Perhaps Mr. Obama's top economic advisers, such as former Federal Reserve Board Chairman Paul Volcker and former Secretary of the Treasury Lawrence Summers, have some fresh ideas that those on the front lines of the crisis have so far failed to consider. What will the new administration do to help struggling homebuyers avoid foreclosure? Do Mr. Obama's advisers plan actions that will keep such people in their homes without breaching mortgage contracts and undermining confidence in mortgage-backed securities and similar vehicles, and without rewarding speculators? What of his promise of a tax cut for 95% of taxpayers? A tax cut clearly would help stimulate demand, but can the nation afford it on top of the almost $1 trillion in federal money committed to the current crisis intervention and the spiraling budget deficit? And what of the accompanying promise to raise taxes on higher-income earners, and capital gains and dividends? The middle of a financial crisis and a recession may not be the time to raise taxes either. These are all important questions Mr. Obama and his team need to address as soon as possible. Until the economy begins to recover — until investors, employers and consumers regain confidence — government tax receipts will decline, constraining the new administration's plans to improve old programs and implement new ones. For example, a weak economy will hamper efforts to address long-term issues that also need to be addressed, such as all-important health care reform and the looming twin crises involving Social Security and Medicare. These issues are not as urgent but cannot be put on the back burner for too long. Mr. Obama outlined his health care reform ideas during the campaign, but the estimated cost was more than $60 billion a year, and his proposals still would leave millions of Americans without health care coverage. How soon does he expect to begin to implement those proposals? Perhaps his health care reform team should reach out to a larger group of experts to tweak the ideas to reduce the costs or to expand the coverage. Whatever changes Mr. Obama makes to health insurance in the country will affect millions of people — not only patients, hospitals, doctors and nurses, but also drug and health insurance companies, and their employees and investors. Such reform should not be rushed. Social Security and Medicare reform have been postponed for a long time. Mr. Obama talked little about how he would reform these two programs, but the day of reckoning for both will be brought closer by an economic recession as unemployment reduces the flow of payroll tax revenue. At some point, he will have to address their problems. Clearly, Mr. Obama will have his hands full, but we should all hope he will be able to manage the presidency as brilliantly as he managed his election campaign.